The Australian dollar stays firmly positive on the day, buoyed by widespread weakness in dollar demand
Aussie has been climbing for the third day in a row, having accelerated the ascent on Tuesday. AUDUSD rallied to ten-day highs around 0.7335 earlier in the day, in a knee-jerk reaction to the minutes of the RBA September meeting.
The central bank reaffirmed that it would not increase the cash rate target until progress is made towards full employment and inflation. At the same time, the regulator noted that the downturn had not been as severe as earlier expected and recovery was underway in most of the country. Also, the bank acknowledged that the AUD is not far from fundamentals. The currency was also supported by the comments about strong public sector balance sheets in Australia.
The AUDUSD pair climbed above the 0.73 handle after the release but failed to stay at the higher end of the extended range and retreated partially. Still, the Australian dollar stays firmly positive on the day, buoyed by widespread weakness in dollar demand and mostly positive risk sentiment.
Of note, the commodity currency could receive another boost from rising oil prices. In recent trading, Brent crude suddenly jumped from three-month lows to the levels above $40. However, as there was no particular catalyst behind the local rally, the buying pressure could wane soon.
In a wider picture, AUDUSD remains within a broader bullish trend despite a bearish correction seen during the first week of this month that took the prices below 0.72 for the first time since August 26. Further dynamics in the pair will depend on dollar behavior, risk sentiment in the global financial markets, and the tone in the oil market.
In the short term, the Aussie needs to hold above the 0.73 figure to challenge the above-mentioned local highs and retarget the 0.7370 next resistance on the way toward 0.74. As the daily RSI shows, there is room for further upside at least in the immediate term.
